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State Attorneys General often investigate antitrust violations – ranging from price fixing to anticompetitive mergers – in conjunction with the federal antitrust enforcement agencies (the U.S. Department of Justice and the Federal Trade Commission). But recently the nation’s AGs have more frequently taken the lead, conducting their own investigations and initiating independent enforcement actions. Are these examples of state AGs merely utilizing their own statutory authority to protect their constituents? Are they filling a vacuum when federal authorities choose not to act? Or are they becoming the equivalent of national regulators? An experienced panel of antitrust practitioners and representatives from state AG offices will share their perspectives on the impact of increased antitrust enforcement by the state AGs and what businesses and their counsel need to understand about it.

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Event Transcript

Speaker 1:Welcome to the Federalist Society's Practice Group Podcast. The following podcast, hosted by the Federalist Society's corporation securities and antitrust and financial services in eCommerce practice groups, was recorded on Thursday, April 19th, 2018 during a live telephone conference call held exclusively for Federalist Society members.

Laura Flynn:Welcome to the Federalist Society's Tele-forum conference call. This afternoon we will be discussing antitrust enforcement by state attorney generals. My name is Laura Flynn, and I'm the deputy director of Practice groups, here at the Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call.

Today we are happy to have with us Vic Domen, Senior Antitrust Counsel at the Tennessee Attorney General's office, Jennifer Thompson, Senior Deputy Attorney General at the Pennsylvania Attorney General's office, Jeffrey Oliver, Senior Associate at Baker Bots, Ian Conner, Deputy Director of the Bureau of Competition at the FTC, and our moderator, Adam Biegal, Co-chair of the Antitrust Team and Partner at Austin and Bird.

After an introduction from Adam and hearing from our speakers, we will go to audience question and answer. Thank you for speaking with us Adam. The floor is yours.

Adam Biegel:Great. Thank you. Hello everyone. Uh, as Laura said, this is Adam Biegel at Austin and Bird in Washington DC and I'd like to welcome you to our program. Uh, today we're going to be talking about a very interesting and important topic that is not always well understood by uh, in house counsel or non antitrust lawyers or frankly even sometimes anti trust lawyers. It is about the overlapping antitrust enforcement jurisdiction between the federal government and state attorneys general, which can pose, uh very important issues uh both for state and federal agencies as well as the industries that come under their jurisdiction, which are essentially all industries in the United States economy.

As, as many people know, in addition to the federal antitrust trust laws that govern everything from mergers to ordinary business conduct, many states have their own antitrust trust laws, and states also have jurisdiction and standing to bring claims under the federal antitrust trust laws. So you have overlapping and complementary anti- people watching the antitrust laws both on a state and federal level.

And in recent months, and years there has certainly been a very large level of activity coming from state attorneys general. So for our discussion today, we're gonna talk about trends that are developing and coming down the pike in antitrust enforcement coming out of the state capitals, as, as a place that you cannot ignore if you're a business counselor or work at a corporation or practice antitrust law. And we have a distinguished panel today that is going to be discussing this topic with us as the, uh, uh our host Laura mentioned. We have Vic Domen with the Tennessee Attorney General's office, and Vic has the distinction uh of not only being the lead antitrust and consumer protection lawyer for, you know for his state attorney general in Nashville but he is also chair of the National Association of Attorneys General Task Force on antitrust and has served in that capacity since 2015. Uh, and so as we'll discuss more, is privy to the issues uh of states that coordinate with each other to enforce uh federal and state antitrust laws.

Uh we also have Jennifer Thompson uh the Senior Deputy Attorney General in the antitrust section of the Pennsylvania office of Attorney General in Harrisburg, Pennsylvania uh who as practiced antitrust law um throughout her career and has been very active in antitrust enforcement actions. Uh and also in her capacity in the attorney general's office, uh she has served on various state boards uh in the state of Pennsylvania including the uh State Board of Cosmetology and the Real Estate Commission which will become relevant uh to our discussion today about the operations of state attorneys general.

We also have Jeff Oliver, an associate in Baker Bot's antitrust competition practice group here in Washington and uh more detailed bio is Jeff uh is formerly a staff attorney at the federal trade commission uh in Washington uh and also has participated as defense counsel in uh merger challenges brought by uh state attorneys general in litigation.

And last but not least we have uh Ian Conner who as noted is de- current deputy director of the Bureau of Competition at the Federal Trade Commission here in Washington and he was previously a partner in the antitrust uh group at Kirkland and Ellis in Washington and also serves as a trial attorney with the United States Department of Justice uh antitrust division. So a diverse array of speakers who have seen this from various perspectives.

So, to to begin our discussion, uh I wanted to ask uh Vic and Jennifer if she wishes to add anything to tell us a-about where states are coming from as they enforce antitrust laws. Um, you know, what are, uh what's the lay of the land about how they consider cases, bring cases, uh investigate matters and, and coordinate with each other uh so that our listeners can really have an understanding of how states begin to fit into this mosaic of enforcing antitrust laws. Vic, would you, would you please explain that for our audience a little bit?

Victor Domen:Sure, sure, no I'd be happy to, and uh thank you Adam and Federalist Society for uh giving us uh an opportunity to speak uh today, and I think it's uh, it's a topic that I think many folks have been asking about. Uh, you know where the state AG's are in antitrust and competition enforcement and what we do, so yeah, as Adam indicated I think it might be, might be good to start with a little history if you want to call it that about how we, how we got our authority and what we use when we start enforcing the antitrust laws.

So, you know, believe it or not, uh I know everyone's familiar with the uh, with the Sherman Act that was passed in 1890 as a, as a federal antitrust statute, but what uh many folks may not know is that the states started battling this uh perhaps even earlier and I think at the time that the Sherman Act was passed about 26 states already had an antitrust statute in place and certainly a lot of it was in response to standard oil and the other trusts that existed at the time.

But uh, but since that time, in addition to just the state laws that have been passed, uh Federal law has recognized uh the state AG's and their authority. So, without uh, without getting into too much detail about where that comes from, I just wanted to mention that you know uh, under federal law uh the AGs have authority to sue as parents patriarch for our citizens under the Sherman Act and that's specifically been granted uh in the Hart, Scott, Rodino Antitrust Improvement Act. Uh, second under section four of the Clayton Act, uh the states have authority to sue for damages on behalf of direct purchasers, so for example, if the state is a purchaser of of things, we'll sue under section four of the Clayton Act as well.

And then finally, under section 17 of the Clayton Act, the states also have been granted sp- uh specific authority to sue for injunctive relief uh and in particular you may want to think about the cases where the states get involved with uh, with blocking a merger for example, where we're trying to stop something and we join, uh, join the federal government. So in addition to those federal laws of course, nearly every state in the country does have a state antitrust act uh and uh there are one or two that don't but uh but in those cases most of them use uh their consumer protection act to uh, to kind of uh, to work through things.

So, you know as we talk today too, I want to uh, I do want to give the disclaimer that uh that was mentioned at the top of uh, of the call and that the opinions I'm going to express today are really just my own. I'm not speaking on behalf of my attorney general's office or the National Association of AGs. But I always enjoy the opportunity to talk about the activities of the state AGs. And that comes really in my role as the antitrust taskforce chair. Uh, what's interesting to note is that uh in uh in 1983 uh NAG as they're affectionately called, uh uh was uh was working under uh perhaps uh a perception that uh that there was a lessening of antitrust enforcement by our federal partners. Uh, but uh, and so the AGs decided to form what's now known as The Multistate Antitrust Taskforce, and the whole point of that taskforce was to give the opportunity for the state AGs to kind of share our ideas and pool our resources when it comes to antitrust enforcement.

So since that time, we've all worked together, uh and it gives us really the chance to just kind of share our ideas and and come up with ideas of of how to enforce the antitrust laws both on the state level and the federal level as a group. As a multistate. And what becomes of that are sometimes multi-state actions as I think we're going to talk about in a little while. Uh but the important thing to think about uh which I think is important uh to this group as well as that you know the AGs are their own individual sovereigns right? Sometimes AGs want to work as a group, sometimes they want to play, blaze their own trails and work differently. I think it's important to note that uh given the 50 uh, 50 state AGs as well as some territories and of course the District of Columbia, there are uh, a number of different ideas and opinions and they certainly can go off in different direction.

And in fact, this November uh, they're gonna be votes in 30 different states and the District of Columbia and two territories who will choose new AGs. Or will choose an attorney general. And of those 30 jurisdictions, 10 of those have open seats, meaning we will have 10 new AGs uh in place uh after the November elections. Uh, other than that I think I'll, I'll open it up and let Jennifer add a few things but I do want to just, I did want to make just one additional point. Uh the AGs are always focused on local issues uh in particular health care issues uh for antitrust enforcement but I think we'll get into that a little more in just a few minutes.

So, Jennifer if you have anything to add, feel free.

Jennifer:Vic, that was actually a fantastic summary, so I just have a couple of things. Uh, first I need to echo Vic's disclaimer that the views that I am expressing here today are my views and not necessarily the views of our attorney general. Uh, I wanted to follow up on something that Vic said. I don't think that we can overstate the importance of the NAG antitrust taskforce. Certainly in coordination among the states and coordination with the federal agencies. Uh, Vic and his predecessors have done an amazing job putting together protocols, getting this organized, facilitating cooperation. And, and frankly that makes it far easier on the targets that we're investigating.

Um, the reason for a lot of that is to ensure that you're not getting 51 or 52 different requests, and uh that that's very important to us. Um, and at the end of the day our primary goal is protecting consumers and we want to do that in the uh most sensible way possible.

Pennsylvania is unfortunately one of the uh few states that doesn't have a purely antitrust statute but we do enforce the antitrust laws through a few methods. Uh, one is we do enforce the federal antitrust laws. Uh, next we actually have a body of common law antitrust in Pennsylvania that as Vic noted a lot of these laws do predate the Sherman Act and this one certainly does. Pennsylvania's been around a long time.

And then we also do um use our consumer protection laws. So um even without a strict antitrust statute that certainly has not hindered our ability to enforce the law when we believe it's appropriate.

Adam Biegel:So, so Jennifer what I guess it does lead um a, a state to, uh to uh you know open investigation [inaudible 00:11:44] case. Is it, is it they, uh a strong local connection or is it something where the federal government may have chosen not to uh you know take any, any action or is there any other common denominators that sort of motivate uh a state AGs office to be you know exercising that jurisdiction you talked about?

Jennifer:Definitely the first one. Um, we look at the impact on consumers as uh any cases particular to Pennsylvania. And some of the cases we will be in from day one. Um, other cases we may learn from the federal agencies that an impact in Pennsylvania has been identified. Uh, sometimes the federal agencies will reach out to us if there is a case that involves something that is under the jurisdiction of the state, such as you know the state insurance laws.

Uh, we can certainly help facilitate communications, we can look at things more on the ground. Um, one thing that we certainly bring is we will do a lot of the witness interviews that are within our state. Um, but really it is the local effect. If there is a national merger that does not have a particularized impact in Pennsylvania sometime we will look at the, sometimes we will look at those, um, but often we say, "Well this is actually more appropriately handled by the federal agencies because this does not impact us any differently than it's going to impact Tennessee or any other state.

Um, but if you know, a hospital merger is a great example of an on the ground impact in Pennsylvania. I think uh citing to the insurance cases that were brought by the Department of Justice and a group of states last year, or actually the year before at this point, there were, uh we were, we participated in the Aetna Humana litigation and that was because there were 10 counties in Pennsylvania where there was going to be illegal concentration. So we became part of that case.

Um, that's, that's a great example of something we look at. We've participated in the airline mergers because you know we have an American Airlines hub in Philadelphia. We used to have a US Airways hub in Pittsburgh and that's something that is, that is very important to our consumers.

Adam Biegel:Sure. And Ian, from your perspective at the Federal Trade Commission, you know, how, how do you view the role of states uh in terms of you know working with you on cases and how you work on cases or uh you know as as someone who may be sort of parting ways on some, uh on some matters from time to time?

Ian Conner:And so, I have to start with a similar disclaimer to Vic and to Jennifer. My, my views as stated do not necessarily represent the views of The Federal Trade Commission, any individual commissioner or the Bureau of Competition. Uh, so with that I will say we, we try and work very closely with the state AGs, especially in situations where we do have a, a locally focused transaction. As Jennifer pointed out, um there may be situations where the Federal Trade Commission may be better positioned to handle a multi-state or a national matter.

Typically that is done in partnership with any interested or effected states. But the states themselves often have a unique expertise in understanding of the marketplaces within their state, and so they often will be better positioned than the FTC to focus on something that is an inter-state issue. So a, a merger or a combination that effects the locality or conduct that is directed at a certain area that is solely within their own states.

And so in that case you may see the federal government, either the DOJ or the FTC stepping back and allowing the um, the states to really be the, the drivers there to the degree that we can provide any assistance uh they would like we would do so, but often the state AGs really are the driving forces in those more locally focused cases.

And as I think both Jennifer and Vic flagged, the AGs have consumer protection and competition often within one office or even one person whereas at least at the FTC it's broken betwee- broken out between the Bureau of Competition and then the Bureau of Consumer Protection and the DOJ doesn't even have a real consumer protection focus to it. It is solely an antitrust agency.

So those are some of the reasons that you might see a differential but by and large we are working together on cases that effect the states locally or multi-states.

Adam Biegel:Sure. Tha- Thank you Ian. In, in recent months and years, uh observers of antitrust enforcement um have, have, have noted that there are certainly some examples of state attorneys general acting separately from the federal antitrust enforcement agencies. The Justice Department and Federal Trade Commission. Uh, recent examples I think that have grabbed attention uh include uh the uh justice department's challenge to American Express's uh, um retailer uh and card rules, which was only appealed by the uh, by state attorneys general led by the uh, Ohio attorney general's office.

Uh, a, you know a recent post merger consummation challenge by the Washington attorneys general, attorney general's office um by itself as well as a recent lawsuit by the California attorney general's office uh against a health system in, uh, in California. Um, I'd like to ask members of the panel whether there, it's correct to perceive uh an increase in sort of the go it alone antitrust enforcement by state attorneys general or whether there are other circumstances that would explain this um or [inaudible 00:17:29] add information to that discussion.

Victor Domen:[crosstalk 00:17:38] Sure, sure. No, I'm happy to, to, to start that discussion off, and at first, first one thing I do want to really emphasize and uh I think Ian touched on this and Jennifer did as well, is that the state AGs and the FTC and the DOJ have a very, I would consider, very close relationship.

We have worked very well hand in hand for years. And I you know, I expect that to continue and it has in many many cases. It's just really a matter of certain circumstances that might uh, might cause one or the other to kind of run with it and take the lead and so you mentioned American Express. Uh, where uh, where I guess seven, originally 17 state AGs and the DOJ challenged some of American Express's restrictions on uh, on retailers from disclosing to customers perhaps the cheapest form of credit to use.

And that case began in 2010 and we all investigated together, we uh brought the litigation together and it was moving through the courts on the district court level we won. In the second circuit we lost uh and so it was right for uh, uh, for cert to the US Supreme court. There was a uh, a transition at the federal level. Uh, but we were still all playing this together and uh and so when the deadlines were coming to determine whether to uh to file for cert or not, the states in an attempt to work with the DOJ and help decided to take the lead.

And so the Ohio AG's office with a number of other states that were original plaintiffs decided to uh seek a petition for cert and you know it's always a, uh, a crapshoot as to whether you're going to have cert granted or not, and lo and behold the Supreme Court did uh did grant cert. And so when you ask for it you get it and it's time for you to kind of step up to the plate, and so once that cert was granted uh the DOJ and the states uh were all working together again and [inaudible 00:19:37] argument which was just I guess uh, just a month and a half ago or so, the solicitor general for Ohio argued for part of the time and the DOJ argued for the rest of the time, and so we worked together and now we're just going to wait to see what happens in that case.

So, I, I don't know that it, it's uh, I don't want to give the perception that uh, that the states are necessarily going it alone. We do work very well with uh, with the federal, with our federal counterparts and expect to do that, but as Jennifer also indicated there are times when may, and Ian as well, that there are times when the states may be able to make a run at something that has a particular uh local impact uh and you mentioned briefly the challenge in California to the [inaudible 00:20:22] health system.

Uh, a, a unique impact uh for the state of California by a service provider, especially in Northern California, where uh you have a very sophisticated California AG's office and antitrust section who can bring that case on their own. In Washington state the same thing. A challenge to the Franciscan CHI uh, uh parties. Uh, where once again you have a very sophisticated AG's office who can bring that challenge, and and really let the FTC get on with a lot of other matters. It's really just a matter of really helping each other and if we can make a go of it and we have the resources to do it, we will.

So uh, I, I don't know. Jennifer, do you have anything you might like to add to that?

Jennifer:I would actually. Um, you know, I, I spoke a little while ago about how us in some cases when we're determining whether or not to get involved in a case or join litigation that we'll say, "Well, this has the same impact in Pennsylvania that it has in multiple other states." And that is a degree of respect that we have for the Department of Justice and the Federal Trade Commission, where, you know, to summarize you've got this.

So, without citing any specific examples, um, for any state there may be numerous cases where the FTC and DOJ have partnered with us during the investigation phase, and then we get to the point where there may be action and it's not uncommon for them to say, "You've got this," or to turn part of an investigation over because there have been just a wave of mergers in recent years and just the uptick just keeps going and sometimes it's more appropriate for an agency to move on to something else.

And it's really, a, a lot of people read into it, "Well, the FTC didn't do anything so there must not be a problem." But it's really more a matter of respect where they say, "Well, you can handle this now." And they're always a resource that's available during these investigations, so, and it's invaluable and it's like, like Vic has said, it's extremely friendly, extremely cooperative. It's um, it's a great relationship and we can't overstate that.

Adam Biegel:Great. Ian, can't help but ask your perspective on it. Uh, as to, it's some of the talking heads might have, have thrown out ideas saying "Well, the state, you're seeing more of the state activity because there's a lack of interest in Washington in merger enforcements." Uh, you know, just to put that strong man out there. I mean, how, how, how would you view I guess what Jennifer and Vic are talking about uh on uh, just, the relationship between the states and the federal government just because we're seeing you know, solo, some solo state action um in enforcement recently.

Ian Conner:Yeah. To the degree that there has been an uptick in state enforcement uh over the past year, I do not think it's a result of an effort to fill a gap in uh federal enforcement. Um, I, the DOJ certainly I think would dispute that they're not presently litigating the AT&T Time Warner challenge uh viviparously.

Um, since I arrived at the FTC in September, we have challenged five mergers, two of which have been abandoned. And we won a preliminary injunction in another merger challenge up in North Dakota in which we did partner with the state attorney general for North Dakota. Um, and that doesn't even include the consents that we've had over the, the past several months.

One thing to consider is there is a natural fluctuation in merger filings and merger challenges that is precipitated by the mergers that are proposed. So, there may be an uptick in the number of mergers proposed but if they are not, not strategic mergers in that they, they don't involve two companies in the same industry and so there's no competitive overlap, there'd be no reason for us to challenge.

Um, similarly the one thing I would point out is at least at the FTC, we have some statutory limits that effect our ability to challenge certain conduct. Not the mergers, but the conduct, and so if you look at Sutter Health, that as Vic flagged a very localized issue in Northern California, but I believe Sutter Health is a nonprofit and the FTC has limitations on it's ability to bring conduct cases on nonprofits.

And so, in that case, we would either refer it to the justice department and you can see that in the uh, the Carolinas case, or we would as Jennifer said, say to the state, "You've got this. You, you, it's an intrastate issue, we can't step in, but I know especially in states like California that have very, very sophisticated attorney general's offices, staffed with people who have been doing antitrust far longer than I have, they know very well how to prosecute a case and have done so before.

The last thing I would flag is something that Jennifer briefly touched on. There are resource constraints that both the federal and the state AGs uh, have to deal with, and so it may be something where it doesn't make sense to have federal and state resources directed at fixing the exact same problem, and so you'll see the federal agencies step up or you'll see the state AGs step up, and, and the other um groups step back from that.

But, overall I would not read anything into the fact that uh, the state AGs have decided to bring certain cases. Uh, other, as far as trying to fill a void in federal enforcement.

Adam Biegel:Thank you. Uh, I want to make sure we uh, we brought Jeff into this discussion as well, so if we've laid the groundwork for you know, who the players are, what their interests are, and some, some recent trends. You know, Jeff, when you're advising clients on mergers or, or business conduct and thinking about you know, all the guidance coming out of the federal agencies in Washington, you know, how do you factor in, you know, other things coming out of all the state capitals that Vic and Jennifer were talking about to try to advice clients? Do we, do we have a risk of you know, uh, you know disbridged interpretation of the antitrust laws or anything like that where you know you may be satisfying you know 49 people but there, there's one person that uh, or one attorney general's office that uh, you know, really has an issue. Uh, do we have to watch all those corners, uh to, for clients to achieve business objectives?

Jeffrey Oliver:Yeah, it's, it's a great question. And thank you, I'll, I'll repeat the standard uh, disclaimer that I'm speaking for myself today uh and no one else. Um, so I, I would say that over the last year, definitely my, my counsel to clients with regard to the, the potential for state enforcement, whether it be a follow on enforcement from, um agency, an agency decision not to enforce anything or, or if it be a stand alone. I would say I've become much more conservative in that counsel meeting that the risk has in my opinion has gone up.

I do think there's a trend um in, in, maybe just in certain states, but maybe across the board. There's, there's an energy there that I just don't think had been there before and let me talk a little bit about why I think that is.

Um, I don't think you can entirely discount um, the interplay between federal politics and and state politics right now, and so if say I had a client with a merger that that implicated California or New York, uh, my counsel would be very specific with regard to the risk that there would be significant or potential for um, significant sort of incremental enforcement in addition to whatever happens at the federal level. And I, I think that that's just a you know, maybe a cynical calculus but I just, I think it can't be discounted that that that those particular states are, are led by very ambitious um elected attorneys general and who have made no um bones about positioning themselves as hard to some extent of a kind of resistance to federal trends, uh, primarily I think the trend toward less regulation.

And I, I just think that, that that's, it would be remarkable wouldn't it if that didn't show itself uh as an increase in state, at least an increase in the risk of state level enforcement and I think we've seen an actual increase in state level enforcement and I do attribute it somewhat to to that dynamic. I, I just think it almost definitely plays a role.

You know, these offices of states attorney general, particularly in states like New York and California, they are a kind of launching pad to higher office. Um, I think, I think, these individuals are very competent and sincere. I'm not questioning at all, but they go after issues that they see as legitimate. Um, but I do see a window in the sense that, that, that it's easier for the time being I think to justify expending the resources on this type of action when you have a federal government that has made it clear that they want to deregulate in a lot of ways.

I think, I think the case for state, in that sense I guess I would say the case for state action, uh, I mean state enforcement, particularly in blue states, has just become easier to make for these states attorney general.

And I fully expect that Jennifer and Vic will have some push back on that, and I welcome it but that, that is my sense of things and that's how I would counsel clients.

Adam Biegel:Yeah. Jennifer and Vic, I guess on the back question, the larger one, you know, what role does the, the fact that you know, there are directly elected uh, except for Tennessee, uh political actors leading the attorney generals offices play in enforcement decisions. You mentioned all those elections. Do the elections matter on state antitrust enforcement?

Victor Domen:Well, I'll start. I think with, with uh some brief comments about that, and I think, I think the thing that, that everyone needs to remember, and this, I think goes for the federal level as well is that although there are different AGs coming and going, the staff remains pretty uh, pretty constant. And so most of the people that I work with, uh have been there, you know, Jennifer and I have been with our offices for a long time. Uh, many of the offices that we're talking about here, although the perhaps the [inaudible 00:31:00] Bureau chief may change, uh the staff are the same. Our ideas haven't changed, and I think that typically uh, you know, both republicans and democrats really look at the antitrust laws as being kind of party blind.

I mean, they really deal specifically with competition and the, and the importance of promoting competition, and I think that's, that's where we uh, you know, where we, we set our sights. That's what we're looking for. I think every AG wants the businesses in their own state to prosper, and uh, and competition is a good thing and that's what we want in all of our, all of our AG's offices, so, and that, that's understood I think, not only through the antitrust laws but also through the staff.

So I think that if a retrospective is done about whether there's an increase or a decrease in state enforcement, I, I'm not sure that there are going to be these big bumps during certain administrations and, and uh it's probably worth kind of looking at, and I'm sure we could probably get a summer intern to, to take a look at some of those statistics to see if state enforcement has changed or increased or whether we're just hearing about it a little bit more.

Uh, but, you know, when it, when it comes to uh, to the AGs you're right, I mean, they, they certainly most of them are elected. I can say here in Tennessee thankfully as a staff level person I'm lucky enough to have an AG who's appointed by our Supreme Court, so that takes a lot of the politics out of it and we're allowed to go ahead and do our job, but uh, but my fellow enforcers in other states may not be quite so lucky and sure, AGs have, have a lot of uh, issues and agendas that uh, that they may be looking into, but uh when it comes to the investigative phase and the recommendation phase, the people making those decisions are the same people who have made them through multiple uh elections and multiple administrations.

Uh, so I don't know that there's really uh, as much of uh, a change when there's a changing of the guard in the front office as people may perceive. Uh, Jennifer, I don't know if you have anything you want to add to that.

Jennifer:No, I think you summarized it beautifully. Uh, just a couple of things. Um, from my perspective here in Pennsylvania being a staff attorney for a very long time, uh very little changes. We have had I believe um, I think four elected AGs since I've been here, and then a couple have left early and they had appointees that came in and served the rest of their terms.

And they have been from both parties, and for me there has been no difference between reporting to a republican AG versus a democratic AG. Um, the, we've talked a little bit about the expertise of the antitrust bureaus at the state level, and we have to remember that a lot of the AGs who come in, their attention is divided among multiple areas of law. Right now it's probably safe to say that our AG is more concerned about the opiod epidemic than virtually anything else.

Their enforcing the criminal laws, they're defending state agencies. We have, I'm part of something called the Public Protection Division, which in, which includes charitable trusts, it includes consumer protection, it includes tobacco enforcement. There's really a lot going on under the AGs umbrella, so um, they really rely on the expertise of the staff to report up and explain to them what is going on in a particular case, talk to them about whether or not action may be appropriate, and fairly consistently, they listen to the staff. It's definitely bottom up management versus top down management.

And I personally have never been asked to do anything for a political reason. One other thing I want to say is um, this is a topic that is not new. Vic and I were on a panel for the ABA I think in January of last year, just before the new presidential administration came in. And the question was what is antitrust law going to look like under the Trump administration. And we are you know, 14 months in at this point, 15 months, there have been very few changes.

Um, it's been a pleasant surprise. I mean, we're still working with the same people in other states in the same manner that we always have and the same situation with the federal agencies.

Adam Biegel:Let me ask, ask Jeff, Jeff about his perspective on sort of w-where we are today, and you mentioned that conservative advice. You know, if you were, uh got word the, one of your clients was being investigated by state attorney general, you know, would you perceive differently based on some of the things that Vic and uh, and uh, Jennifer were talking about? About the politics of it. Uh, I mean would you be more likely to uh, you know, uh, get uh, you know business leaders to you know call on the attorney general who uh, maybe they had a relationship with? Uh, you know, which you, you know, you might not do as early in a federal investigation, uh with those appointed leaders. Or, you know, do you, do you just try to resolve the concerns that are, that are brought to you and you know, and an enforcement agency is an enforcement agency?

Jeffrey Oliver:Yeah, it's a good question, and I think, I think there's uh, there's a blind spot for, for folks like me, who, who do this full time in Washington, uh, it can be very tough to know how to approach uh, a state AGs office in terms of advocacy. And I think that's one uh area where um, if this is a trend or if it's not a trend I think there's a lot of room um for, for improvement I guess I would say.

I think, I think one of the difficult parts is um, um is knowing you know, so how does the decision actually get made then? It sounds like staff at least in the states represented on this call are making the calls. Um, as we've indicated there's 48 other states. Is it the same, is it the same process there? And in compari-

So a good point of comparison of course is how it works at the federal level and they're you know, there's a very specific process and, and parties get you know multiple bites of the apple with every stage of the decision when you go with staff you've got the months and months of the investigation and you know you're going to get your time with them. And then it goes up to the bureau if you're at the FTC or the equivalent level of the DOJ and you get your time with the bureau and then they all wrap up their recommendations and it goes up to the commission where the antitrust AG and you get your bite there.

And there's almost, there's an extraordinary le- extraordinary level of due process, right? And I think that's been built in over time as a kind of recognition of how, at least on the merger side, how difficult the prognostication is, which is the whole, the whole game is trying to predict what's going to happen post merger based on very limited information.

And a recognition that even when you have just very good information it's really, really hard to predict the future, so that's, that's an explanation for why there's so much due process, I think at the FTC. My experience at the state level has, has been that it's, it's harder to come by that kind of due process and it's just harder to know how to influence the decision.

And so if I had a merger tomorrow that was in front of the states that are represented on the call or anywhere, I mean, my recommendation would be that, um, you kind of have to force this due process. You have to be very aggressive about um getting face time with whoever the persuadable party is. If that's staff then, then, then staff, and I'm sure that would be the initial approach on any, on any uh deal.

Uh, but then, asking um, for time with the A- state AGs. Which in my experience is not, is not always offered up. Um, that's his name or her name is going to be the one that appears on the complaint at some point, I think they're, they're the ultimate decision matter, or make in any matter and I would, I would recommend to parties, look, it's a bit of a black box, in my experience and we're kind of gonna have to just um be creative a-and I'm just trying to be as honest as I can. That's, that's how I've approached the state AGs.

Now, I'm sure there's more experienced players than me who just know how it works, but my experience again is that it's just, it's not always clear actually how, how to advocate effectively before a state AG. Partially because it's almost always been that they follow on and you're advocating to all of them at once which means you're just advocating to the FTC and the states that are listening in. Then they all get, they all sort of come out on the same page, at least in the past.

Lately that hasn't been the case. Um, but let me stop there and let others respond.

Adam Biegel:Yeah, I was gonna say, this is a good opportunity maybe to open up that black box. Vic and Jennifer, in your experience either in your offices or work on the NAG task force, you know, how, how could someone in Jeff's position you know, appropriately, you know, try to seek that due process that they'd like to have to make sure there's you know appropriate consideration of all perspectives and everyone's you know hearing the parties out?

Victor Domen:Uh, Jennifer, I don't know, do you want to, do you want to go, or I'm happy to if you'd prefer.

Jennifer:No, sure, I'll start. Um, we do have a very structured uh level system in our office. We have the attorney general. We have the first deputy attorney general. Then we have three division directors. Each of the division directors has oversight of the various sections in the office.

I'm actually fairly low on the totem pole. I'm, I'm not at any level in that. I'm at the very bottom, but any request that parties may have to meet with anyone in that chain of command is, is completely respected. Staff is always available to meet. Um, you know if a request to meet with the AG is made, we do everything we can to facilitate that. It often does take longer just because of the time constraints that the attorneys general have, or at least our attorney general has. But if ultimately they're unable to make the meeting, they may designate to the first deputy.

But we appreciate any information that people come in and want to provide to us. Um, our analysis is very fact based, so I mean we've looked carefully at gathering information on the markets, we've conducted an economics analysis, we've looked at potential defenses. We've looked at whether or not, you know if somebody is raising a failing firm defense, we will vet that.

Um, we have all that information available. It's actually uh far more common for us to not bring a case than to bring litigation. So um you know, we, we, we carefully consider everything and we are always happy to hear from the parties so if you were to ever have a problem here in Pennsylvania you know certainly reach out to me, reach out to our section chief, and make sure that we know that you want to come in and we can make that happen. The door, the door is always open. We don't have quite the timeline structures that the federal agencies have, but we certainly have the availability.

And Vic I'll turn it over to you now.

Victor Domen:Right. And just to add to that a little bit, uh, you know, we uh, uh, so when an investigation is begun, as I said, we, you know we'll typically partner up with whichever federal agency, and I'm talking more about, about national, uh, national matters that have local impact, uh, you know, we'll, we'll partner up with either the, with Ian at the FTC or with uh folks at the DOJ.

And a working group will form. Now, naturally there are 50 plus AGs and 50 AGs aren't in every matter, uh, but say a working group is created that includes 12 or 20 state AGs. In that working group structure, uh a lead state or lead states are appointed. And uh, they are the executive committee for lack of a better term and they will they will be the point person for counsel for the parties.

So, and I know Jeff knows this, but so if Jeff is looking to get in to perhaps take the temperature of the states as a whole, you know, he can reach out to the uh, the, one of the states in the executive committee to get a sense of where they are and what's going on, and I think as the investigation uh, goes on, uh, they become very familiar with, with the state AGs and really who's speaking on behalf of them.

Now, if we're getting closer to litigation of course, uh, I think at that point, uh, parties uh, counsel for the parties recognize where some of the, where some of the issues may lie. Because often times they're very similar between the states and, and, and the DOJ or FTC and, and, and that, uh, that's a point where counsel for the parties wants to talk, as Jennifer said, we are always open to it. My office, and I think all the AGs offices always have an open door with that.

And so, I think it's, it's pretty, uh pretty common I know it is in some of the investigations we've conducted for counsel for the parties to, to not only meet with uh, with the heads of the federal agencies, but also to request a meeting with our front office and uh, and as I said, we're always open to that. Uh, our AGs uh, you know, in any of the cases that I would say that where you've seen state participation the least by my state uh, in the last few years, you can bet that there probably was a meeting that took place with counsel for the parties and or representatives from the parties with our front office. Uh, you know, typically, you know, we'll participate in that and we'll be there.

Uh, but, uh, but not always. Sometimes there are meetings I don't know about right? Uh, as a staff level person, but uh, but that door is open, uh, in our state and I think it is in just about every state that participates in the working group for a particular matter.

Adam Biegel:Sure. I want to squeeze in one more question before we check to see if there were any questions from the audience. From your perspective, Ian, uh, if people are working with the AGs office, outside of the beltway, does that play any role in, in the FTC decision making? You know, if if you know, Jeff is successfully convinced you know an AGs office that something is you know, not worth pursuing or something like that, could an AG be an advocate to provide input to the uh, uh, the federal antitrust enforcement agencies? Say, "This is a local concern. You know the federal government shouldn't, it should step away from an antitrust perspective and leave it alone." Do you ever see that?

Ian Conner:So, as we said multiple times on this call, and we work closely with the state AGs and are in fairly constant communication with them where they're involved in one of our matters. Uh, I can't think of an instance where an AG has said, has resolved something through some sort of consent and then said uh, FTC or DOJ now that we've resolved it, this is a local issue and, issue and you need to step out of it.

There are situations in which the state legislature has enacted certain laws that get a grant and interest immunity so the [inaudible 00:46:01] certificate of need laws and the healthcare uh space would be examples of that where we for instance had a challenged to a hospital merger in West Virginia uh I think probably 18 months ago. And instead of West Virginia legislature decided that they would pass a state law that permitted that merger to go through and at that point we stepped back.

So there are situations in that, under that scenario, but I can't remember an AG actually coming up and saying you need to, to uh, exit this investigation because I've got it handled.

Adam Biegel:I do want to come back to the COPA issue, but I did want to ask Laura whether we have any questions on the line because we're happy to uh, to entertain them.

Laura Flynn:Let's go to audience questions. In a moment you'll hear a prompt indicating that the floor mode has been turned on. After that to request the floor, enter star then the pound key.

When we get your request you will hear a prompt, and then you may ask your question. We'll answer questions in the order in which they are received. Again, to ask questions, please enter star and then the pound key on your telephone keypad.

It looks like we have one audience questioner. Should we go to them?

Adam Biegel:Okay. Certainly.

Speaker 8:I uh, a friend of mine had been [inaudible 00:47:28]counsel for Texaco. Uh, and he, he said that uh, every time the attorney, various attorney generals were elected, they would bring an antitrust suit against the oil companies. And uh, that would go on for a while until um, they just would sort of peter out, but it was a great way to grand stand when they first got elected. Does that still go on?

Victor Domen:I mean, I guess, I'll take that first. Uh, I wouldn't say that's the case at all. I have not seen... you know, certainly there are for lack of a better term, usual suspects, right? There are state, there are state AGs offices which have always been strong antitrust enforcers and so you'll see their name again and again, and so I don't know that it's necessarily the election of, of a new AG that makes a difference so much as the fact that certain states have a tendency to be uh, you know, stronger competition advocates and stronger competition enforcers.

Uh, and uh, and so I, I don't know that I've seen any uptick or change necessarily when a new AG is elected so much as the office continues what it has always done. And so the reputation kind of remains the same for lack of a better term.

Jeffrey Oliver:This is Jeff, if i could jump in here, I have I think maybe a unique perspective in that that may be the, it's possible that that's the reason I'm this call, I'm on this call. Let me explain what happened with me and my client and um, and, and then we can theorize whether it fits into your conception of how it works.

So, we represented Valero in their proposed acquisition of two oil and gas terminals from Plains in California, and Plains All American. And the FTC took it's time with the investigation uh, staff made a recommendation to block the deal. Uh, the commission uh, disagreed and took no action and let the clock expire, meaning that the deal would have been free to close.

California who had a new, a fairly new attorney AG at that point, um, I'm sorry, uh, attorney general at that point, with, I think, a strong um, platform of, uh, consistent with democratic, the democratic platform, which I think increasingly includes an antitrust plink to it. Uh, he, staff again, it's hard to tell who decide that they were going to try and block the deal even after the FTC had passed on it.

Uh, they sued for a TRO, the judge denied that. Um, temporary restraining order, uh California went for then, a preliminary injunction, the judge denied that, but not without giving some substitute comfort to California and his order denying the PI.

When California made it clear that they were likely to go for a permanent injunction, uh, the parties ended up abandoning the deal. Uh, because it was, it was a small deal and it had just become, it had gone on for well over a year, and um, parties just needed to move on.

But I, I don't know, you know, it's so hard to tell, what the motivations were. I don't doubt the sincerity, but I don't think, uh, again I just think you have to take it in context of, of current events both at the federal level and at the state level. It's hard to go wrong challenging oil and gas deals in California, um, so there's always that risk there. That was built into the analysis from the outset, but um, for what it's worth, I just, I offer that story as perhaps support for the theory you're proposing here.

Jennifer:Jeff, this is Jennifer, and I think I know virtually nothing about this so listening to you explain it was very interesting, but the one thing that jumped out at me and what you said was that the FTC staff did believe that there was enough there to recommend challenging the transaction and even if the commission ultimately voted not to go forward with that, it still indicates to me based on my experience with FTC staff, which is pretty expansive, that um there was probably enough there that you know, it makes sense that California staff would believe that they could, you know, that they should challenge the transaction.

So, that's just [inaudible 00:52:10] knowing nothing about that, that was just the one thing that jumped at me based on what you said versus you know, assuming it was political. It does really sound like that there was a, a very sound legal basis.

Jeffrey Oliver:Let me, uh, and it's, it's quite possible, and I should, I guess I should clarify a couple things. One, I, I didn't see the staff's recommendation memo of course. I can only assume that since we were at the front office uh, with talking to the commissioners that there was a recommendation to block.

Um, I'd offer maybe just uh, uh, an example of uh, and maybe this helps explain why I tend to believe that ideology may have played some role here, and that is about six years ago, um, in 2012, 2013, uh, there was another deal in California, [inaudible 00:53:03] bought a refinery from BP.

Now, without getting too far into the weeds there, you had an actual horizontal overlap, meaning two refineries in souther California were combining, in the Valero Plains deal, the, the issue was vertical. I don't want to dwell on that, but that's only to say that it was a significant issue in it's prior BP Tesoro deal.

Similar fact pattern, FTC passed on the deal, staff, I was at the FTC at the time. Staff was motivated to bring a suit, the commission did not. Uh, California was disappointed, but did not try to block the deal. They, um, they went, they got some very basic behavioral remedy, something about not laying off people and not shutting down any plants and stuff like that that I'm sure the parties were more than happy to sign on to.

And so, it's difficult for me to entirely dismiss the context in which each of those events occurred. I, I at the time [inaudible 00:54:16] was the attorney a- the AG in California, Barack Obama was the president. I think it would have been difficult, frankly, and I fully recognize this is a bit cynical, but I think this plays into it. I think it would have been difficult to muster the political will at the state level to do something that a very enforcement minded administration had not done. That's just a harder sell.

And, I don't know, I mean, having [inaudible 00:54:47] I totally respect, and I think he makes, I'm sure he's pursuing what he things is uh, right. I don't, I don't doubt his sincerity at all, but this dynamic of extreme um, disagreement lets say, between the federal and state um authorities, I just have a hard time dismissing the theory that, that, that plays a role in some of these decisions. I do.

Adam Biegel:I wanted to make sure we got at least one more, uh, uh question in, and we can also check if there are other questions from the audience. I did want to just tee this up as a, at least to, a wrap up with the time we have remaining for the panelists. You know, Ian made a good comment before about you know the role, the changing role of uh, you know, antitrusts at the state level, how you were seeing uh, many uh, state actors, legislatures, uh, and administrative agencies, become active in doing things that put the AGs in sort of a, a different role than they may have been in the past in trying to uh utilize you know, state action that could potentially immunize uh, you know certain conduct within a state from the federal antitrust laws.

So, we're seeing states you know, maybe working with their constituent entities and agencies uh on those kinds of issues uh that might, uh insulate them from federal antitrust law, and we're also seeing as people familiar with the North Carolina Dental Supreme Court case, we're seeing states more as defendants based on allegations that uh, appointed boards that have a majority of uh competitors on them, whether it's dental boards or Jennifer I don't know, maybe your cosmetology board perhaps. Uh, you know, are liable for antitrust issues under, under federal antitrust laws so you may be a defendant also trying to defend the actions of a state board.

I guess with that as another thing that's in the mix besides the political issues and enforcement priority issues, we were talking about, I just wanted to open it up for our panelists just to say you know what they see coming down the pike and whether you know there are, there's a potential for you know this overlapping system uh to become you know more efficient, or whether there are even any legislative proposals that would alter the balance of enforcement uh, you know jurisdiction that they're aware of between states and the federal government or is this sort of the system we've created and people should uh, need to live within it. So I'll sort of open that up about predictions for the future or you know potential for changes to our panelists.

Victor Domen:Well let me just, I'll start. I know we only have a minute or two, but, but let me just say, I mean I think that the point you're making about state action is a good one and I know we could go around and around with Ian on that one for another couple of hours, but I think that just goes to the federal system that we have in place. I mean, the states, the states, uh, uh have been granted certain rights as uh, as individual sovereigns and so there are times when uh, when they'll exercise those rights and I think that's important to the federal system that we have and so there may be cases where a state government determines that uh, competition may have to be effected a little bit for the better good of its citizens and I think that uh, we all enjoy that so sometimes you know what we don't agree with uh, with folks in DC.

Uh, but second, uh, when you ask me to kind of look ahead, um, I think that one thing that, that the listeners probably want to keep in mind is that the local interest is always important. I think that's no more important than um, as exemplified in health care, and uh, Pennsylvania and Jennifer can talk to this you know they are an expert in in health care, uh, antitrust and competition enforcement but healthcare is a priority for all our AGs and so many of our enforcement actions deal specifically with that whether that's in pharmaceuticals or in healthcare mergers but that's the key. I mean healthcare always has a local impact and so we're always looking for that and that's, that's an area that um, that I think everyone should focus on. But that's it for me.

Jennifer:Yeah, so you know, just to support what Vic has said, healthcare is supremely important here in Pennsylvania. Uh, we live in these markets, we see the impact on our consumers, on increases in prices. We see how hard it is for people, um as these prices go up, as access decreases, and that is uh, completely a priority for us to evaluate anything that, that effects that. Any mergers, any conduct, that type of thing. And I know this is going to be very brief, but straying into um, um this is certainly my personal opinion and not the opinion of the office or the Pennsylvania Department of State here, but regarding professional licensing, I, I kind of have a unique perspective, because by statute representatives from the AGs office sit on most of our licensing board, which come under the umbrella of the Pennsylvania Department of State's Bureau of Professional and Occupational Licensing.

They are supervised. Um, they have a very strict regime in place that goes back to an old state law case where the likelihood of us seeing something like what happened in North Carolina is pretty small. There's a couple of areas where maybe something could squeak through, but there is truly uh, in many ways active supervision here. So for me personally, being an antitrust enforcer, I'm troubled by a movement to pass statutes that create immunity versus passing laws that create active supervision and that's like I said, completely my personal opinion, but that's sort of how I balance the professional licensing versus the antitrust laws.

Adam Biegel:Ian, I'm sure you have a thought on that as we try to conclude.

Ian Conner:I do, and and, um I will be very brief. So I mean obviously the Federal Trade Commission has been very proactive in the last year or so on state licensing uh, regulations that it believes are anticompetitive. And we have a number of comments that have been filed as you can find on our website. Uh, I would suggest to everyone uh looking at the decision that came down from the commission last week in the Louisiana real estate board because that is exactly the, the type of situation that Jennifer was just describing where the courts, or the commission found that the efforts of the state there did not qualify as active supervision and that case remains in litigation, so I, I would direct people to uh, just read the publicly available decision on that.

Adam Biegel:Jeff I'll offer you a last word if you have one.

Jeffrey Oliver:Oh, thanks, I, I don't have anything more substantive to add. I did want to just um, expand my disclaimer now that I've talked so much about my clients. Um, my uh, anything I've said on this call it as not intended for subsequent attribution. If there are reporters on the call and, and you want to talk to me about it please, uh, give me a call and, and we can, we can talk about it. Thanks.

Adam Biegel:Great. Thank you everyone. As we've reached the of the hour I'd like to think all of our panelists and audience members for participating today and on behalf of the Corporation Securities and Antitrust Practice Group of the Federalist Society, I'd like to thank you all for, for joining and participating in this discussion. Laura I'll turn it over for you if there are any concluding remarks.

Laura Flynn:Great. Our next tele-forum conference call is scheduled for later today at 2pm and that call will be a criminal justice reform discussion. Please tune in. A reminder to keep an eye out for emails announcing upcoming tele-forum calls and to consult the full schedule on the Federalist Society's website. On behalf of the Federalist Society, I want to thank our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email and info@fedsoc.org. Thank you all for joining us. We are adjourned.

Speaker 1:Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit the Federalist Society's website, at fedsoc.org/multimedia.